EnerSys Reports Second Quarter Fiscal 2022 Results
Second Quarter FY 22 Highlights | |
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Key Results from Operations by Segments ($ in millions) | ||||||||||
Q2 FY22 | Q2 FY21 | % Change | ||||||||
Energy Systems | ||||||||||
$ | 369.8 | $ | 340.8 | 8.5 | % | |||||
Operating Earnings | 1.2 | 22.8 | (95.1 | ) | ||||||
Adjusted Operating Earnings * | 8.5 | 30.1 | (72.0 | ) | ||||||
320.7 | 263.8 | 21.6 | ||||||||
Operating Earnings | 41.0 | 24.2 | 69.8 | |||||||
Adjusted Operating Earnings * | 41.0 | 24.2 | 69.9 | |||||||
Specialty | ||||||||||
100.9 | 103.8 | (2.9 | ) | |||||||
Operating Earnings | 11.4 | 11.5 | — | |||||||
Adjusted Operating Earnings * | 11.9 | 11.9 | — |
* This is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures” for more information.
Message from the CEO
Q2 was a mixed quarter, with exceptionally strong demand and prolonged supply chain headwinds. Demand continued to accelerate across all of our lines of businesses, far exceeding pre-COVID levels. Revenue in the quarter was up 12% over last year with the full potential suppressed by lingering supply chain disruptions. Our backlog at quarter-end exceeded
Net earnings attributable to
Net earnings for the second quarter of fiscal 2021 was
Excluding these highlighted items, adjusted Net earnings per diluted share for the second quarter of fiscal 2022, on a non-GAAP basis, were
Between
Net sales for the second quarter of fiscal 2022 were
The Company’s operating results for its business segments for the second quarters of fiscal 2022 and 2021 are as follows:
Quarter ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 369.8 | $ | 320.7 | $ | 100.9 | $ | 791.4 | ||||||||
Operating Earnings | $ | 1.0 | $ | 37.3 | $ | 11.4 | $ | 49.7 | |||||||
Inventory adjustment relating to exit activities | — | 1.0 | — | 1.0 | |||||||||||
Restructuring and other exit charges | 0.2 | 2.7 | — | 2.9 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 5.9 | — | 0.5 | 6.4 | |||||||||||
Other | 1.4 | — | — | 1.4 | |||||||||||
Adjusted Operating Earnings | $ | 8.5 | $ | 41.0 | $ | 11.9 | $ | 61.4 |
Quarter ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 340.8 | $ | 263.8 | $ | 103.8 | $ | 708.4 | ||||||||
Operating Earnings | $ | 21.5 | $ | 22.5 | $ | 11.4 | $ | 55.4 | |||||||
Restructuring and other exit charges | 1.3 | 1.7 | 0.1 | 3.1 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 5.7 | — | 0.4 | 6.1 | |||||||||||
Other | 1.5 | — | — | 1.5 | |||||||||||
Acquisition activity expense | 0.1 | — | — | 0.1 | |||||||||||
Adjusted Operating Earnings | $ | 30.1 | $ | 24.2 | $ | 11.9 | $ | 66.2 | |||||||
Net earnings for the six months of fiscal 2022 was
Net earnings for the six months of fiscal 2021 was
Adjusted Net earnings per diluted share for the six months of fiscal 2022, on a non-GAAP basis, were
Net sales for the six months of fiscal 2022 were
The Company’s operating results for its business segments for the six months of fiscal 2022 and 2021 are as follows:
Six months ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 741.0 | $ | 656.8 | $ | 208.5 | $ | 1,606.3 | ||||||||
Operating Earnings | $ | 7.6 | $ | 79.4 | $ | 23.6 | $ | 110.6 | |||||||
Inventory adjustment relating to exit activities | — | 1.0 | — | 1.0 | |||||||||||
Restructuring and other exit charges | 0.7 | 11.2 | (1.2 | ) | 10.7 | ||||||||||
Amortization of identified intangible assets from recent acquisitions | 11.9 | — | 0.9 | 12.8 | |||||||||||
Other | 1.4 | — | — | 1.4 | |||||||||||
Adjusted Operating Earnings | $ | 21.6 | $ | 91.6 | $ | 23.3 | $ | 136.5 |
Six months ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 694.2 | $ | 526.6 | $ | 192.5 | $ | 1,413.3 | ||||||||
Operating Earnings | $ | 43.0 | $ | 49.0 | $ | 16.6 | $ | 108.6 | |||||||
Restructuring and other exit charges | 1.8 | 2.5 | 0.2 | 4.5 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 11.7 | — | 0.8 | 12.5 | |||||||||||
Other | 1.5 | — | — | 1.5 | |||||||||||
Acquisition activity expense | 0.2 | — | 0.1 | 0.3 | |||||||||||
Adjusted Operating Earnings | $ | 58.2 | $ | 51.5 | $ | 17.7 | $ | 127.4 | |||||||
Reconciliation of Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with
Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances. For those items which are non-taxable, the tax expense (benefit) is calculated at 0%.
These non-GAAP disclosures have limitations as an analytical tool, should not be viewed as a substitute for operating earnings or Net earnings determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding the Company's ongoing operating results. This supplemental presentation should not be construed as an inference that the Company's future results will be unaffected by similar adjustments to Net earnings determined in accordance with GAAP.
A reconciliation of non-GAAP adjusted operating earnings is set forth in the table above, providing a reconciliation of non-GAAP adjusted operating earnings to the Company’s reported operating results for its business segments. Included below is a reconciliation of non-GAAP adjusted Net earnings to reported amounts. Non-GAAP adjusted operating earnings and Net earnings are calculated excluding restructuring and other highlighted charges and credits. The following tables provide additional information regarding certain non-GAAP measures:
Quarter ended | ||||||||
(in millions, except share and per share amounts) | ||||||||
Net Earnings reconciliation | ||||||||
As reported Net Earnings | $ | 35.6 | $ | 35.7 | ||||
Non-GAAP adjustments: | ||||||||
Restructuring and other exit charges | 3.9 | (1) | 3.1 | (1) | ||||
Amortization of identified intangible assets from recent acquisitions | 6.4 | (2) | 6.1 | (2) | ||||
Other | 1.4 | (3) | 1.5 | (3) | ||||
Acquisition activity expense | — | 0.1 | (4) | |||||
Income tax effect of above non-GAAP adjustments | (3.8 | ) | (3.3 | ) | ||||
Non-GAAP adjusted Net Earnings | $ | 43.5 | $ | 43.2 | ||||
Outstanding shares used in per share calculations | ||||||||
Basic | 42,575,576 | 42,521,659 | ||||||
Diluted | 43,255,832 | 43,087,455 | ||||||
Non-GAAP adjusted Net Earnings per share: | ||||||||
Basic | $ | 1.02 | $ | 1.02 | ||||
Diluted | $ | 1.01 | $ | 1.00 | ||||
Reported Net Earnings (Loss) per share: | ||||||||
Basic | $ | 0.84 | $ | 0.84 | ||||
Diluted | $ | 0.82 | $ | 0.83 | ||||
Dividends per common share | $ | 0.175 | $ | 0.175 | ||||
The following table provides the line of business allocation of the non-GAAP adjustments shown in the reconciliation above:
Quarter ended | ||||||||
($ millions) | ||||||||
Pre-tax | Pre-tax | |||||||
(1) Inventory adjustment relating to exit activities - |
1.0 | — | ||||||
(1) Restructuring and other exit charges - Energy Systems | 0.2 | 1.3 | ||||||
(1) Restructuring and other exit charges - |
2.7 | 1.7 | ||||||
(1) Restructuring and other exit charges - Specialty | — | 0.1 | ||||||
(2) Amortization of identified intangible assets from recent acquisitions - Energy Systems | 5.9 | 5.7 | ||||||
(2) Amortization of identified intangible assets from recent acquisitions - Specialty | 0.5 | 0.4 | ||||||
(3) Other - Energy Systems | 1.4 | 1.5 | ||||||
(4) Acquisition activity expense - Energy Systems | — | 0.1 | ||||||
Total Non-GAAP adjustments | $ | 11.7 | $ | 10.8 |
Six months ended | ||||||||
(in millions, except share and per share amounts) | ||||||||
Net Earnings reconciliation | ||||||||
As reported Net Earnings | $ | 79.5 | $ | 70.9 | ||||
Non-GAAP adjustments: | ||||||||
Restructuring and other exit charges | 11.7 | (1) | 4.5 | (1) | ||||
Amortization of identified intangible assets from recent acquisitions | 12.8 | (2) | 12.5 | (2) | ||||
Other | 1.4 | (3) | 1.5 | (3) | ||||
Acquisition activity expense | — | 0.3 | (4) | |||||
Income tax effect of above non-GAAP adjustments | (7.5 | ) | (5.2 | ) | ||||
Swiss Tax Reform | $ | — | $ | (1.9 | ) | |||
Non-GAAP adjusted Net Earnings | $ | 97.9 | $ | 82.6 | ||||
Outstanding shares used in per share calculations | ||||||||
Basic | 42,637,953 | 42,453,774 | ||||||
Diluted | 43,396,588 | 43,009,755 | ||||||
Non-GAAP adjusted Net Earnings per share: | ||||||||
Basic | $ | 2.30 | $ | 1.95 | ||||
Diluted | $ | 2.26 | $ | 1.92 | ||||
Reported Net Earnings (Loss) per share: | ||||||||
Basic | $ | 1.87 | $ | 1.67 | ||||
Diluted | $ | 1.83 | $ | 1.65 | ||||
Dividends per common share | $ | 0.35 | $ | 0.35 |
Six months ended | |||||||||
($ millions) | |||||||||
Pre-tax | Pre-tax | ||||||||
(1) Inventory adjustment relating to exit activities - |
1.0 | — | |||||||
(1) Restructuring and other exit charges - Energy Systems | 0.7 | 1.8 | |||||||
(1) Restructuring and other exit charges - |
11.2 | 2.5 | |||||||
(1) Restructuring and other exit charges - Specialty | (1.2 | ) | 0.2 | ||||||
(2) Amortization of identified intangible assets from recent acquisitions - Energy Systems | 11.9 | 11.7 | |||||||
(2) Amortization of identified intangible assets from recent acquisitions - Specialty | 0.9 | 0.8 | |||||||
(3) Other - Energy Systems | 1.4 | 1.5 | |||||||
(4) Acquisition activity expense - Energy Systems | — | 0.2 | |||||||
(4) Acquisition activity expense - Specialty | — | 0.1 | |||||||
Total Non-GAAP adjustments | $ | 25.9 | $ | 18.8 |
Summary of Earnings (Unaudited)
(In millions, except share and per share data)
Quarter ended | |||||||
Net sales | $ | 791.4 | $ | 708.4 | |||
Gross profit | 177.9 | 177.5 | |||||
Operating expenses | 125.3 | 119.0 | |||||
Restructuring and other exit charges | 2.9 | 3.1 | |||||
Operating earnings | 49.7 | 55.4 | |||||
Earnings before income taxes | 39.9 | 41.5 | |||||
Income tax expense | 4.3 | 5.8 | |||||
Net earnings attributable to |
$ | 35.6 | $ | 35.7 | |||
Net reported earnings per common share attributable to |
|||||||
Basic | $ | 0.84 | $ | 0.84 | |||
Diluted | $ | 0.82 | $ | 0.83 | |||
Dividends per common share | $ | 0.175 | $ | 0.175 | |||
Weighted-average number of common shares used in reported earnings per share calculations: | |||||||
Basic | 42,575,576 | 42,521,659 | |||||
Diluted | 43,255,832 | 43,087,455 |
Six months ended | |||||||
Net sales | $ | 1,606.3 | $ | 1,413.3 | |||
Gross profit | 371.1 | 352.5 | |||||
Operating expenses | 249.8 | 239.4 | |||||
Restructuring and other exit charges | 10.7 | 4.5 | |||||
Operating earnings | 110.6 | 108.6 | |||||
Earnings before income taxes | 92.2 | 83.1 | |||||
Income tax expense | 12.7 | 12.2 | |||||
Net earnings attributable to |
$ | 79.5 | $ | 70.9 | |||
Net reported earnings per common share attributable to |
|||||||
Basic | $ | 1.87 | $ | 1.67 | |||
Diluted | $ | 1.83 | $ | 1.65 | |||
Dividends per common share | $ | 0.35 | $ | 0.35 | |||
Weighted-average number of common shares used in reported earnings per share calculations: | |||||||
Basic | 42,637,953 | 42,453,774 | |||||
Diluted | 43,396,588 | 43,009,755 | |||||
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data)
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 407,506 | $ | 451,808 | ||||||
Accounts receivable, net of allowance for doubtful accounts: |
584,584 | 603,581 | ||||||||
Inventories, net | 640,998 | 518,247 | ||||||||
Prepaid and other current assets | 135,768 | 117,681 | ||||||||
Total current assets | 1,768,856 | 1,691,317 | ||||||||
Property, plant, and equipment, net | 500,092 | 497,056 | ||||||||
703,164 | 705,593 | |||||||||
Other intangible assets, net | 413,646 | 430,898 | ||||||||
Deferred taxes | 65,275 | 65,212 | ||||||||
Other assets | 66,421 | 72,721 | ||||||||
Total assets | $ | 3,517,454 | $ | 3,462,797 | ||||||
Liabilities and Equity | ||||||||||
Current liabilities: | ||||||||||
Short-term debt | $ | 36,006 | $ | 34,153 | ||||||
Accounts payable | 294,975 | 323,876 | ||||||||
Accrued expenses | 273,852 | 318,959 | ||||||||
Total current liabilities | 604,833 | 676,988 | ||||||||
Long-term debt, net of unamortized debt issuance costs | 1,075,989 | 969,618 | ||||||||
Deferred taxes | 77,068 | 76,412 | ||||||||
Other liabilities | 185,707 | 196,203 | ||||||||
Total liabilities | 1,943,597 | 1,919,221 | ||||||||
Commitments and contingencies | ||||||||||
Equity: | ||||||||||
Preferred Stock, |
— | — | ||||||||
Common Stock, |
557 | 555 | ||||||||
Additional paid-in capital | 556,202 | 554,168 | ||||||||
(594,649 | ) | (563,481 | ) | |||||||
Retained earnings | 1,734,057 | 1,669,751 | ||||||||
Contra equity - indemnification receivable | (4,001 | ) | (5,355 | ) | ||||||
Accumulated other comprehensive loss | (122,147 | ) | (115,883 | ) | ||||||
Total |
1,570,019 | 1,539,755 | ||||||||
Nonredeemable noncontrolling interests | 3,838 | 3,821 | ||||||||
Total equity | 1,573,857 | 1,543,576 | ||||||||
Total liabilities and equity | $ | 3,517,454 | $ | 3,462,797 | ||||||
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)
Six months ended | ||||||||||
Cash flows from operating activities | ||||||||||
Net earnings | $ | 79,555 | $ | 70,914 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 48,340 | 47,059 | ||||||||
Write-off of assets relating to exit activities | 3,756 | 1,753 | ||||||||
Derivatives not designated in hedging relationships: | ||||||||||
Net gains | (117 | ) | (372 | ) | ||||||
Cash proceeds | 147 | 846 | ||||||||
Provision for doubtful accounts | 1,240 | 182 | ||||||||
Deferred income taxes | 108 | (1,820 | ) | |||||||
Non-cash interest expense | 1,133 | 1,036 | ||||||||
Stock-based compensation | 9,424 | 10,586 | ||||||||
(Gain) loss on disposal of property, plant, and equipment | (37 | ) | 156 | |||||||
Changes in assets and liabilities: | ||||||||||
Accounts receivable | 15,914 | 106,581 | ||||||||
Inventories | (125,479 | ) | 21,080 | |||||||
Prepaid and other current assets | (18,969 | ) | 7,369 | |||||||
Other assets | 1,686 | 3,132 | ||||||||
Accounts payable | (32,694 | ) | (49,557 | ) | ||||||
Accrued expenses | (48,013 | ) | 1,282 | |||||||
Other liabilities | (1,565 | ) | (2,954 | ) | ||||||
Net cash (used in) provided by operating activities | (65,571 | ) | 217,273 | |||||||
Cash flows from investing activities | ||||||||||
Capital expenditures | (34,622 | ) | (39,905 | ) | ||||||
Proceeds from disposal of facility | 3,268 | — | ||||||||
Proceeds from disposal of property, plant, and equipment | 133 | 81 | ||||||||
Net cash used in investing activities | (31,221 | ) | (39,824 | ) | ||||||
Cash flows from financing activities | ||||||||||
Net borrowings (repayments) on short-term debt | 2,155 | (16,502 | ) | |||||||
Proceeds from Second Amended Revolver borrowings | 275,700 | 45,000 | ||||||||
Repayments of Second Amended Revolver borrowings | (5,700 | ) | (100,000 | ) | ||||||
Repayments of Second Amended Term Loan | (161,447 | ) | (16,837 | ) | ||||||
Debt issuance costs | (2,952 | ) | — | |||||||
Option proceeds, net | 1,158 | 1,766 | ||||||||
Payment of taxes related to net share settlement of equity awards | (9,000 | ) | (4,602 | ) | ||||||
Purchase of treasury stock | (31,512 | ) | — | |||||||
Dividends paid to stockholders | (14,891 | ) | (14,879 | ) | ||||||
Other | 393 | 255 | ||||||||
Net cash provided by (used in) financing activities | 53,904 | (105,799 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (1,414 | ) | 15,603 | |||||||
Net (decrease) increase in cash and cash equivalents | (44,302 | ) | 87,253 | |||||||
Cash and cash equivalents at beginning of period | 451,808 | 326,979 | ||||||||
Cash and cash equivalents at end of period | $ | 407,506 | $ | 414,232 | ||||||
The call, scheduled for
The call will also be webcast on
The conference call information is:
Date: | |
Time: | |
Via Internet: | http://www.enersys.com |
Domestic Dial-In Number: | 877-359-9508 |
International Dial-In Number: | 224-357-2393 |
Passcode: | 4759148 |
A replay of the conference call will be available from
The replay information is:
Via Internet: | http://www.enersys.com |
Domestic Replay Number: | 855-859-2056 |
International Replay Number: | 404-537-3406 |
Passcode: | 4759148 |
For more information, contact
EDITOR'S NOTE:
More information regarding
Caution Concerning Forward-Looking Statements
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act, which may include, but are not limited to, statements regarding EnerSys’ earnings estimates, intention to pay quarterly cash dividends, return capital to stockholders, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, including statements identified by words such as “believe,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and similar expressions. All statements addressing operating performance, events, or developments that
Although
Source: EnerSys